Royal Mail risks being penalised amid investigation by Ofcom over failure to meet delivery targets

Regulators have launched an investigation into Royal Mail following its failure to deliver more than three-quarters of first class mail on time over the past year. In its annual financial report released on Friday, Royal Mail’s parent company, International Distribution Services (IDS), revealed that only 74.5% of first class mail was delivered within one working day.

According to the standards set by communications regulator Ofcom, 93% of first class mail should be delivered on time, excluding the Christmas period. Royal Mail also did not meet its goal of delivering 98.5% of second class mail within three days, managing only 92.4% on time.

Ofcom said: “If it does not provide a satisfactory explanation and we determine that Royal Mail has failed to comply with its obligations, we will consider whether to impose a financial penalty.”

Last year, Ofcom fined Royal Mail £5.6 million for not meeting delivery targets for 2022/23. The data was included in a financial results statement released more than a day late, after market closure on Friday, instead of the initially scheduled time of 7am on Thursday, May 23. The report indicated that Royal Mail’s losses had decreased to £348 million, down from £419 million for the year ending March 31.

Martin Seidenberg, chief executive of IDS, said: “We have improved quality, won back customers lost during industrial action, controlled costs and delivered Christmas for our customers. Positive momentum is building, although there is hard work in front of us to get back to profitability.”

The report comes as IDS is awaiting a potential buyout offer from Czech billionaire Daniel Kretinsky. IDS did not provide any update on the potential deal, stating only that no firm offer had been received yet.

The company reiterated its intention to accept a proposed bid of about £3.5 billion submitted on May 15. Business Secretary Kemi Badenoch stated earlier this month that Royal Mail’s universal service obligation must be preserved in any sale.

IDS previously indicated that Mr Kretinsky agreed to offer “contractual undertakings” to safeguard key public interest factors. These undertakings include commitments to Royal Mail’s plan to maintain six-day-a-week first class letter deliveries under the universal service, protect workers’ rights, and preserve the Royal Mail brand, UK headquarters, and tax residence. Mr Kretinsky has until 5pm on May 29 to make a firm offer.